Is Right Now a Good Time to Do a Roth Conversion?- Episode 158
Converting your traditional IRA to a Roth IRA is not a decision that should be taken lightly. While tax-free growth is always nice, sometimes the price you have to pay – mostly income taxes on the conversion – makes it not worth doing.
But for many people, right now may be the perfect time to convert their pre-tax funds into a Roth. How do you know if and when you should make the move? Are there other considerations besides having to pay taxes right now that may sway you one way or the other?
These are important questions. Find out what you need to know from podcast host Johnny Dean and “Professor” Rick Plum, CFP® on today’s episode of Managing Your Financial Future!
Important Information:
You should always seek counsel of the appropriate advisor prior to making any investment decision. All investments are subject to risk including the loss of principal.
Traditional IRA account owners have considerations to make before performing a Roth IRA conversion. These primarily include income tax consequences on the converted amount in the year of conversion, withdrawal limitations from a Roth IRA, and income limitations for future contributions to a Roth IRA. In addition, if you are required to take a required minimum distribution (RMD) in the year you convert, you must do so before converting to a Roth IRA.
IRA withdrawals will be taxed at ordinary income rates. Withdrawals prior to age 59½ may also be subject to a 10% penalty tax.
Roth IRA distributions of principal from a Roth IRA are tax-free; however, any earnings will be taxed at ordinary income rates and a 10% penalty tax will apply if withdrawn prior to age 59½ or within five years of the date the Roth IRA was established, whichever is longer.
The information provided is based on current laws, which are subject to change at any time. Lucia Capital Group is not affiliated with or endorsed by the Social Security Administration or any government agency.
Social Security rules can be complex. For more information about Social Security benefits, visit the SSA website at www.ssa.gov, or call (800) 772-1213 to speak with an SSA representative.
Rick Plum is a registered representative with, and securities and advisory services offered through LPL Financial, a registered investment advisor and member FINRA/SIPC. The investment professionals are affiliated with LPL Financial and are conducting business using the name Lucia Capital Group, a separate entity from LPL Financial.
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